Cramer's Take on Herbalife

Mad Money host Jim Cramer weighs in on the action in shares of Herbalife over the last year.

Herbalife CEO Michael Johnson has a long history of making money for the shareholders, Jim Cramer said Thursday, which is why the "Mad Money" host often interviewed him on his program.

Lately, though, Cramer hasn't had Johnson on for an interview. So what's the deal?

"I haven't been featuring Herbalife on the show, as, alas, the company — meaning the fundamentals, the financials, the numbers — have become a sideshow to a much bigger battle: a battle between hedge funds," Cramer explained. "We've got one hedge fund saying the company is basically a pyramid scheme that has no business being in business and another hedge fund manager, who says that it's a legitimate business and the stock is darned cheap."

It all started last month when Bill Ackman revealed a short position in the stock, calling the multi-level marketer a "pyramid scheme" because distributors earn more than 10 times as much from recruitment as from selling the company's products.

Since then, the stock has become the site of a battle royale between some of the hedge fund industry's biggest players.

Third Point's Daniel Loeb acquired a stake of more than 8 percent, and Carl Icahn was reported to have a stake in Herbalife, according to the "Wall Street Journal." A person familiar with hedge fund Kynikos Associates told Reuters that short seller Jim Chanos is believed to have been shorting the stock for a while.

So where does Cramer fit in?

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"You know me, I don't care. I avoid battlegrounds like the plague and I want you to avoid battlegrounds, too," he said. "They are dangerous places that have cost me a lot of money over the years and I know they will do the same thing to you."

That said, Cramer thinks things are starting to favor Loeb and the long positions because Ackman is just trying to get the government to take up a case against Herbalife. Ackman needs an ally in his fight, though, but Cramer doesn't think he'll find one powerful enough to stop Herbalife's growth. The Justice Department won't want to go after an entity to the point of where it would wipe out jobs and the Federal Trade Commission is a deliberate organization that isn't likely to take the action Ackman wants, Cramer said. Meanwhile, the Securities and Exchange Commission seems to want as much disclosure as possible and Herbalife is already providing that, he added.

It seems Loeb, on the other hand, has many powerful allies, including Icahn.

"With Herbalife, the company itself has just become a giant plaything for hedge funds and they can be as feckless as they are fickle. Loeb could decide to blow all of his stock out at a moment's notice. Ackman can just declare victory on the next swoon lower," Cramer said. "None of these things can be gamed. So you need to approach this as a spectator only."

Yet if the company's financials did matter to the stock, instead of the drama caused by the hedge funds, then Cramer said he'd be a buyer of Herbalife. Then again, he thinks Ackman has already sold what he can sell while Loeb and Icahn still have firepower.